Intensifying Measures to Curtail Competitive Pricing for Economic Stability in China
In the latest issue of Global Logistics, the focus is on managing risks in international trade due to geopolitical tensions, a topic of significant importance in today's global economy.
The article begins by shedding light on the challenges faced by various sectors, including the solar industry, electric vehicles, lithium batteries, steel, cement, and food delivery. A price war erupted in 2023 among brands such as BYD and Tesla in the electric vehicle sector, while the solar industry is grappling with a crisis due to massive overcapacity, resulting in losses of $40 billion last year. In the food delivery sector, tech giants are burning billions in subsidies to gain market share.
Economists warn that changing consumer behavior, driven by expectations of ever-lower prices, risks entrenching deflation. This is a concern, particularly in China, where youth unemployment stands at 17.8%. The government views curbing this hypercompetitive grind as essential for social stability.
In response to these mounting deflationary pressures stemming from industrial overcapacity and brutal price wars, China's government has initiated a campaign to curb aggressive price-cutting by domestic companies. The President of the People's Republic of China during this period is Xi Jinping.
The article also provides three ways to manage risks in supply chains affected by trade wars. However, it does not delve into the specifics of these strategies, leaving readers with a call to action to explore these strategies further.
Interestingly, China's current production capacity for wafers, cells, and modules in the photovoltaic manufacturing value chain is sufficient to meet annual global demand through 2032. This could potentially alleviate some of the pressures in the solar industry, assuming the overcapacity issue can be resolved.
As the world continues to navigate geopolitical tensions, understanding and managing risks in international trade will be crucial for businesses to thrive. The article in Global Logistics serves as a valuable resource for those seeking to navigate these complexities.
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